Jury out still as we end 2020
Thursday 31 December 2020
With the Brexit Bill now passed and given royal assent the UK leaves the EU at 23.00 GMT today. This long chapter of a very soggy saga will officially end and with it, in theory, ends the related GBP volatility. The level of impact moving forward both to the negative and positive side remains to be seen though. It's been a wild ride at times but equally very tradeable at others. I hope my steers have served you well.
We've continued to see a softer USD helped by some USD sell signals for month/year end flows still. COVID continues to cast its sad shadow. Sad and disturbing times still. No option expiries of note today/tomorrow. Equities and oil remain firm overall and the crazy march higher for Bitcoin continues. Risk sentiment ends the year on a happy-clappy optimistic note but these are thin trading conditions still and we wait to see if we witness reversals as another year gets underway.
Given it's New Years Day tomorrow and most markets are closed I will take the opportunity to have another day off. Normal service will be resumed on Monday. 2021 is going to be another difficult year but we look forward to being of continuing assistance.
GBPUSD duly found a base at 1.3575-80 where yesterday's retreat found support and now rallying to test 1.3670, not seen since May 2018 on the softer USD tones and some general GBP demand on the Brexit relief sentiment. Those large option expiries kept it pinned around 1.3600 but once out of the way it's been a steady progression higher. EURGBP has found a cap at 0.9060 (GBPEUR support at 1.1035) and extended losses after a break down through the pivotal 0.9030 area and now testing support into 0.8985 (GBPEUR resistance at 1.1130) as I type. GBPJPY found support at 140.00 and then 140.40 to test 141.00 this morning on the firmer GBP/risk sentiment combo.
I'll be giving the whole Pound scenario some thought over the New Year break so will reserve judgement for the time being. When I voted Leave back in 2016 I wrote then that I thought ultimately it would benefit GBP pairs but that it would be a long process. Well, that's played out so far with plenty of wobbles along the way but as we end the year in upbeat mode is the fallout now all done? I think not but as ever we must let the market decide.
USDJPY has failed above 103.30 but equally finding support at 103.00-10 still as some firmer risk sentiment and GBPJPY demand lend support.EURJPY held 126.50 but failed above 127.00 again and providing good two-way pips with some EUR rally supply notable generally. EURUSD failed above 1.2300 but now in retreat a little amid some general EUR supply again with EURGBP and EURJPY both falling. USDCHF capped above 0.8850 but since held around 0.8800 on the retreat as EURCHF remains steady with the SNB ever watchful and EURUSD off its highs.
AUDUSD has found a base at 0.7560 and used the general USD supply plus some AUDDJPY demand to test 0.7720. My jury out on this one at the moment. We should get a clearer picture as 2021 gets underway. Still has wobble potential.USDCAD capped at 1.2810 and has fallen to test 1.2730 on firmer oil/risk/USD supply but finding a little support down there this morning.
Let's continue to be careful out there in all things. Staying safe must be our main priority still. Happy New Year to you all.
Interbank rates: 08.32 GMT